Occidental notes rise as new tranches price; U.S. Steel paper gains amid acquisition

By James McCandless

San Antonio, Dec. 8 – Energy and manufacturing names were the focus during Tuesday’s distressed debt session.

Occidental Petroleum Corp.’s notes rose as the company brought a two-part offering of senior notes to market.

As oil futures were pulled in opposite directions, Antero Resources Corp.’s and Superior Energy Services, Inc.’s issues varied while Laredo Petroleum, Inc.’s paper improved.

Meanwhile, United States Steel Corp.’s notes gained after the company announced that it would be purchasing the remaining stake in Blue River Steel.

Sector peer Cleveland-Cliffs, Inc.’s issues were pushed higher.

Travel name American Airlines Group, Inc.’s paper was active but unchanged while United Airlines Holdings, Inc.’s notes diverged after vaccine headlines.

Movie theater chain AMC Entertainment Holdings, Inc.’s issues ended on mixed footing.

Occidental edges higher

Occidental Petroleum’s notes were on the rise on Tuesday, traders said.

The 2.9% senior notes due 2024 added ¼ point to close at 95¼ bid. The 2.7% senior notes due 2022 rose ¾ point to close at 100½ bid.

As the market closed on Tuesday, the Houston-based independent oil and gas producer priced a $2 billion offering of senior notes, Prospect News reported.

The deal included $750 million of five-year notes that priced at par to yield 5½% and $1.25 billion of 10-year notes that priced at par to yield 6 1/8%.

On Monday, Occidental commenced cash tender offers to purchase up to $1.5 billion of five series of outstanding notes. The tender offer was later increased to $2 billion.

The offers will expire at 11:59 p.m. ET on Jan. 5.

Oil varies

As oil futures were pulled in opposite directions, distressed energy tranches mostly mimicked that movement, market sources said.

West Texas Intermediate crude oil futures for January delivery shed 16 cents to finish the session at $45.60 per barrel.

North Sea Brent crude oil futures for February delivery ended the afternoon at $48.84 per barrel after a 5 cent add-on.

Denver-based producer Antero Resources’ issues varied in direction.

The 5 1/8% senior notes due 2022 garnered ¼ point to close at 96¼ bid. The 5 5/8% senior notes due 2023 dipped 1¾ points to close at 94 bid.

Houston-based oilfield services provider Superior Energy’s paper moved the same way.

The 7 1/8% senior notes due 2021 shaved off ¾ point to close at 28 bid. The 7¾% senior notes due 2024 picked up 1 point to close at 32½ bid.

Tulsa, Okla.-based E&P company Laredo Petroleum’s notes ended on higher ground.

The 9½% senior notes due 2025 pushed up 1 point to close at 84 bid. The 10 1/8% senior notes due 2028 jumped up 5¾ points to close at 79½ bid.

U.S. Steel improves

Meanwhile, manufacturer U.S. Steel’s issues gained, traders said.

The 6.65% senior notes due 2037 inched up ¼ point to close at 90½ bid. The 6 7/8% senior notes due 2025 garnered ¾ point to close at 97½ bid.

Before the market opened on Tuesday, the Pittsburgh-based steelmaker announced that it would exercise its call option to purchase the remaining outstanding stake in Blue River Steel.

The company will use $774 million in cash on hand to make the purchase.

Last year, U.S. Steel purchased a 49.9% stake in the industry peer, with chief executive officer David Burritt later saying that buying the remaining stake was a “top strategic priority.”

U.S. Steel expects the transaction to strengthen its order book, increase competitiveness and boost product innovation.

The company expects the deal to close in the first quarter of 2021.

Cleveland-based sector peer Cleveland-Cliffs’ paper was pushed higher.

The 7% senior notes due 2027 hopped up 6 points to close at 94 bid. The 5 7/8% senior paper due 2027 picked up ½ point to close at 101 bid.

Airlines in focus

Travel name American Airlines’ notes were active but ultimately unchanged, market sources said.

The 5% senior notes due 2022, despite dipping as low as 87 bid, closed level at 88 bid. The 11¾% senior notes due 2025 were rigid to close at 116¼ bid.

The Fort Worth-based airline and others in the industry continued to see high activity amid headlines about the first recipients of the Pfizer coronavirus vaccine.

After receiving the regulatory approval of the British government, the first people received the vaccine.

Later this week, the U.S. Food and Drug Administration is expected to grant emergency approval for the vaccine.

In the latest negotiations over coronavirus stimulus, the airline industry is expected to receive $17 billion.

Chicago-based commercial airline United Airlines’ issues diverged in direction.

The 5% senior notes due 2024 gained ¼ point to close at 100 bid. The 4¼% senior notes due 2022 were quoted at 101 bid.

AMC mixed

Movie theater chain AMC’s paper ended on mixed footing, traders said.

The 12% notes due 2026 rose ¼ point to close at 22¼ bid. The 10½% paper due 2025 closed level at 71 bid.

During the Tuesday session, the Leawood, Kan.-based theater chain’s structure saw a positive trend with the vaccine news.

As the coronavirus pandemic persists, theater attendance has remained low despite a systematic reopening of AMC’s locations.

Last week, major movie studio Warner Bros. announced that its 2021 films would be released simultaneously in theaters and on the streaming platform HBO Max.

© 2015 Prospect News.
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